Saturday, April 17, 2010

Star Turns On Simons

Up to now, the Indianapolis Star editors have sided with the Simons in their quest to get new subsidies for their Indiana Pacers team. Today, the editors taken a decidedly different turn against the Simons in an editorial entitled, "City Shouldn't Forfeit To Pacers." The editorial is sharply critical of discussions by the CIB about assuming $15 million annually in costs from the Simons while allowing the team to keep all of the revenues it currently earns from operating Conseco Fieldhouse. "For the city, in the person of CIB member Paul Okeson, to tell the world it is 'seriously thinking about' shouldering the entire $15.4 million while the Pacers say they'll think about it is mindboggling," the editorial reads. "The city isn't even ruling out letting the team continue to rake in proceeds from non-Pacer events."

The editorial raises a good point about how the taxpayers' representative in this negotiation, Paul Okeson, seems to be negotiating against the side he is supposed to be representing. The IBJ's Anthony Schoettle has an excellent story today about the hefty price the Simons will have to pay to the CIB if it wants to move its franchise to another city. Schoettle discusses the lease agreement between the Pacers and the CIB with fellow blogger Paul Ogden, who has concluded that the agreement will require the Pacers to pay a break up fee of at least $150 million. Ogden points out that the Simons must sell the team first before it can break the lease; it simply cannot move the team to another city and retain ownership of the franchise. Forbes magazine estimates the value of the franchise at $281 million.

Instead of using the penalty provision to its full advantage in negotiations, Okeson insists on mitigating its impact. “When you peel it all back, the penalty isn’t as substantial as you might think," Okeson told the IBJ. "City officials don’t think the penalty would be big enough to impede the sale of the team to an out-of-state group, but said penalty proceeds would be enough to operate the fieldhouse without the Pacers for at least three or four years," Schoettle writes. As the Star editorial notes, Okeson's view of the situation is simply "mindboggling." Why is this man sitting at the table as our representative when he so clearly is working against our interests?

Schoettle's article goes on to discuss the bad timing of a sale of an NBA franchise. He says the number of potential buyers and interested cities is very limited. He cites sources who say the value of NBA franchises is currently in decline. Further, he notes that the CIB has a right of first refusal to purchase the franchise if the Simons elect to sell it. Observers think it highly unlikely that Herb Simon would sell the franchise on the cheap. Anyone can see that the CIB is the one holding all the cards in this negotiation. Why we're forfeiting our rights to the Simons is any one's guess.

10 comments:

Downtown Indy said...

The Joker in this deck is whether the CIB would part ways with the Pacers 'amicably' and simply forego collecting the penalty payment.

I am dissapointed to find Schoettle repeating the FUD Okeson and Morris like to spread about 'having Conseco Fieldhouse sit vacant,' when the Pacers account for just around 40 event dates annually.

Perhaps the note about NBA franchise values being on the decline is significant. Maybe Herb figures the approx $300 mil current worth is the end of the ride and it's time to sell before it goes down more.

Marycatherine Barton said...

Maybe the Gannett STAR has finally murmured this disapproval of the Simons, because it is a Saturday, and not as many people read its editorial pages today, lol. Anyway, thank you, AA, for having set a fine example for them to follow.

Paul K. Ogden said...

Okeson suggested that that the Pacers can offset the penalty provision by another provision requiring the CIB to compensate the Pacers for losses their franchise incurred while in Indianapolis. The only thing is no one can find that provision in the contract which is why it didn't make it int the article. Okeson is not an attorney and none of the Pacers (which would be Barnes & Thornburg) or the CIB's attorney can point to that provision that allows an offset.

Yet astonishingly Okeson is willing to plow ahead as if the Pacers can simply pick up the team and move it without penalty. Heck the termination clause isn't even triggered if they move. They have to be SELLING the team and the team moving out of town. Also, the Pacers have to be losing money. Yet Okeson hasn't even looked at the Pacers books or had an independent audit. The guy needs to be canned ASAP. He's either the worst negotiator ever or he's a shill for the Pacers. Either way he's not serving the public.


No one can find that provision in the contract. It's a figment of Okeson's imagination. It is clear Okeson has no idea what he's talking about

Hoosier in the Heartland said...

"Why we're forfeiting our rights to the Simons is any one's guess."

Ummmm, because cronyism is the dominant theme in the Ballard administration? Makes one long for the Peterson Plan!

Citizen Kane said...

Downtown Indy - they most definitely would forgive the penalty. Remember, Simon is a "good corporate citizen."

And, of course, Okeson is doing this, because that is his charge. They knew they were going to do this for the Pacer's so they took Grand off the Board, so they could pretend that this was no insider deal. But it is and it will be unless we arise en-masse, but alas no one, except a handful really care enough to stop it. And it sure want stop as the result of any elected or appointed officials.

They will lie; the sheep will believe the lie and the thieves will ride away in the night with our money - and as has been indicated by Advance Indiana - from the next crooked water deal.

As for the Star, when it comes to crunch time, they will side with Simon.

Sean Shepard said...

I think it is a little unfair to castigate the Ballard administration solely over this kind of stuff.

Cities across the country, regardless of their leadership, have gotten jacked by sports teams who have allowed their salaries and costs to exceed their ability to make a profit in a truly free market without subsidy.

While I think most of us would agree that we expect our elected leaders to stand up to the threats and to negotiate much better deals (at minimum) or not engage in public financing of private endeavors (at best) to use this situation as some kind of evidence that the Ballard administration is corrupt probably isn't fair - at least no more so entangled and misguided as any other administration of a major city across the county.

But, yes, we should expect better. We should not back down in fear because somebody might take their ball and go play somewhere else and shame on the citizens for allowing public dollars to be put at risk in just such an event.

Has anyone read this book: http://www.nebraskapress.unl.edu/product/Field-of-Schemes,673388.aspx ?? I haven't gotten a chance to yet.

Advance Indiana said...

Sean, I'm not even going to begin to make sense of your last comment. It totally contradicts your earlier position on this issue.

Sean Shepard said...

Don't misunderstand AI, I'm totally against taxpayer funding of this kind of money losing, side-business/hobby for millionaires.

I'm just sick of the word "corrupt" being thrown at everyone all the time. The whole system of government we have in this country is corrupt at this point.

Government, rather than protecting the property rights of individuals, gets leveraged by all manner of entities to deprive people of their property and redistribute it not just via public welfare for the poor, down on their luck or even those that are just unambitious; but, also to corporations and other organizations.

We need to start electing people that accept that it is never appropriate to take money from people under threat of violence being done against them to begin with, much less transferring the stolen property to church's, community organizations, sports teams or other entities.

And I know we all get frustrated at how the 'people assets' between government, the big law firms and some of these other organizations get shifted from time to time. I understand that if you want to sell X to 'whomever', hiring somebody with insider connections to 'whomever' is a tactic that can be deployed. In government it's disheartening but a big reason why military contractors are chock full of retired generals I suspect.

The issue is one of no principle that states that it is wrong to rob from the poor to give to the rich. Is that corruption or is that just people falling into a pattern of doing things the way they are always done? I just suggest that it is a lack of foundational principles to respect people's rights. I don't know that it is "corrupt" (like evidence has started to suggest Brizzi may be) but more a matter of nobody ever taught these folks any better.

Then they look down their nose at libertarian leaning folks who dare to suggest that giving the people's money (directly or indirectly) to these massive sports monopolies is tantamount to organized theft. Yet, it is the hard cold truth.

They claim it may be for the greater good; but, is that not what all these folks claim with all of their misguided programs? The argument that the programs themselves may be counter productive to the end goal is never even given audience because the stadiums or the millionaire ball players are visible, tangible things but what could have otherwise been is not.

If my error is that I don't "hate" these people so much as consider them unenlightened at best or fooled by rationalizing of what should be criminal behavior then I apologize. I don't think they are all evil incarnate, mostly they are just wrong.

Advance Indiana said...

Take your pick, Sean. Either Ballard is remarkably stupid or he's corrupt. Either way, the public is the big loser.

Sean Shepard said...

I'm not sure I like either choice. Was Ronald Reagan stupid or corrupt when he tripled the national debt? Was the (nearly) entire city council stupid or corrupt when they voted to give a million dollars to "arts" organizations or five million to churches and other private entities for "crime prevention grants"?

Are some of them stupid, sure. Are some of them corrupt, probably.

Was the entire machinery of city and state government "stupid" or "corrupt" when they publicly funded the stadium deals? Or are they just doing what nearly every other major city has done and become stocked with people who forget that governments are instituted to PROTECT our liberty and property not take it on behalf of others or their pet projects.

It is government doing what governments always do.

If the Pacers leave maybe it's time for somebody create something akin to the old ABA? On their own dime.